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Publishers Testify in Apple Antitrust Case

Jun 06, 2013

On Monday the DOJ's trial against Apple -- which is charged with colluding to raise ebook prices in an antitrust case -- got underway in New York. Though Apple was originally charged along with publishers, those companies have long since settled the case and are now testifying against Apple.

On Tuesday, the David Shanks CEO of Penguin said that a clause in its contract with Apple that allowed Apple to match the lowest price of any other retailer selling Penguin books was a factor in its decision to switch Amazon over to the agency pricing model. As Reuters put it, "At trial, the government has sought to show Apple's most-favored nation clause provided an incentive for the publishers to get other retailers onto the agency model and raise prices there too." Though, it should be said, that since the DOJ launched this case Amazon has renegotiated contracts with publishers and kept a similar "Most Favored Nation" clause in its contracts.

From Apple's perspective, the testimony was likely mixed. While Reidy said Apple did not pressure Simon & Schuster to require Amazon to switch to the agency pricing model, Grandinetti did say, according to Reuters, the switch to agency pricing was made in order to "slow down the success of the Kindle."

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At the outset of the antitrust lawsuit brought by the Department of Justice, things didn't look good for Apple. Even the judge hearing the case in lieu of a jury urged the company to settle, like its co-defendents had all done. But Apple refused, and in the second week of the trial, things are looking up for the company.